A Forbes Blog writes "Fidelity Believes Its European Bank Holdings Safe". The piece, by Robert Lenzner, says, "Fidelity, the massive mutual fund management firm, headquartered in Boston, has taken the trouble to explain to me how it vetted all its holdings of European bank short term securities held in its giant money market funds." He quotes Fidelity, "Our money market mutual funds do not have any direct exposure to any banks based in Greece, Ireland, Portugal or Spain. Our money market mutual funds' European bank exposure is well diversified across a dozen countries and is concentrated with those banks that are deemed to be the "national champions" -- the highest quality, most systemically important banks of each country. The funds invest only in very high quality U.S. dollar-denominated, short-term debt instruments. We seek to provide shareholders with stability, liquidity and yield, in that order. The funds remain very well positioned in light of the continued risk and uncertainty that is unfolding in Greece and across Europe. Since February 2010, our investment approach has factored in a default by Greece on its sovereign debt and the potential for a resulting contagion across the periphery of Europe.... The French banks that Fidelity money market mutual funds are investing in are among the strongest financial institutions in the world. They are well capitalized, have strong local deposit bases and represent minimal credit risk.... [T]he French banks can withstand significant losses on this sovereign exposure. This is an earnings issue, not a solvency issue. We have also focused closely on the liquidity pools that these banks have built up over the past few years. These liquidity buffers are very, very large. For example, the largest banks in France each have over 100 billion Euro in immediate emergency liquidity." See also, the New York Times' "In a Greek Default, Higher Risk for Money Market Funds" and yesterday's Wall Street Journal "Is There Greek Debt in My Money-Market Fund?".
